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Skill-biased Wage Effects of Domestic Outsourcing

Author

Listed:
  • Eren Gürer

    (Department of Economics, Middle East Technical University, Ankara, Turkey)

  • Erol Taymaz

    (Department of Economics, Middle East Technical University, Ankara, Turkey)

Abstract

This study examines the impact of domestic outsourcing on the wages of workers performing outsourced tasks in Türkiye, using an administrative employee-employer linked dataset. Outsourcing events are identified by tracking worker flows across firms with specific properties. Unlike existing studies, our dataset incorporates buyer-supplier transactions, enabling us to confirm that a relationship between the predecessor and successor firm begins following the outsourcing event. This improves our ability to identify outsourcing events, which we use to explore wage effects of both high-skilled and low-skilled outsourcing. Our findings indicate that low-skilled workers experience wage losses from domestic outsourcing, while high-skilled, professional workers benefit, suggesting that domestic outsourcing may be one of the factors contributing to rising wage inequality.

Suggested Citation

  • Eren Gürer & Erol Taymaz, 2025. "Skill-biased Wage Effects of Domestic Outsourcing," ERC Working Papers 2501, ERC - Economic Research Center, Middle East Technical University, revised Mar 2025.
  • Handle: RePEc:met:wpaper:2501
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    References listed on IDEAS

    as
    1. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
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    3. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    4. Kirill Borusyak & Xavier Jaravel & Jann Spiess, 2024. "Revisiting Event-Study Designs: Robust and Efficient Estimation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3253-3285.
    5. D.Babet & O.Godechot & M.G. Palladino, 2023. "In the Land of AKM: Explaining the Dynamics of Wage Inequality in France," Documents de Travail de l'Insee - INSEE Working Papers 2023-20, Institut National de la Statistique et des Etudes Economiques.
    6. Cortes, Guido Matias & Salvatori, Andrea, 2019. "Delving into the demand side: Changes in workplace specialization and job polarization," Labour Economics, Elsevier, vol. 57(C), pages 164-176.
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    8. Mayara Felix & Michael B. Wong, 2024. "The Reallocation Effects of Domestic Outsourcing," Cowles Foundation Discussion Papers 2416, Cowles Foundation for Research in Economics, Yale University.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    domestic outsourcing; subcontracting; wage inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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